Report: CRE Mortgage Originations Hit Second-Highest Level on Record
Traditional lenders stepped back from commercial real estate lending in the latter part of 2022. Even with this, the Mortgage Bankers Association’s (MBA) 2022 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation said that CRE mortgage originations totaled $816 billion for the year. This represents the second-highest level on record, after the record-breaking $891 billion in originations generated in 2021.
Excluding activity from smaller and mid-sized depositories not directly captured in MBA’s survey, commercial and multifamily mortgage bankers closed $595 billion of loans in 2022. This was a 13% decline off the $683.2 billion reported in 2021.
Jamie Woodwell, MBA’s Head Of Commercial Real Estate Research, said that borrowing and lending started off strong in the early part of the year. But lending activity “dropped off because of rising interest rates, uncertainty about property values and increased questions about the economy and some property fundamentals,” Woodwell said in a press release that detailed the survey’s results. He added that bank lending actually increased by 12%, year over year.
Multifamily properties generated the highest volume in 2022 at $437 billion of the total and $333 billion of mortgage bankers’ originations. First liens made up 93% of the total dollar volume closed by mortgage bankers.
The survey also noted that depositories ended up as the leading capital source. They accounted for $408 billion of total commercial and multifamily lending in 2022 and $189 billion in mortgage banker originations. Meanwhile, the government-sponsored entities (GSEs) generated a total volume of $128 billion. This was followed by life insurance company and pension funds, private-label commercial mortgage-backed securities (CMBS) and private debt funds (i.e., investor-driven alternative lenders).
Woodwell acknowledged in the release that this year remains uncertain and will continue to do so. “A key question for 2023 is when the market will have stabilized enough for the logjam in new deal activity to break,” he said.